The failure warning light is based on fluid loss -- and with the Volvo's pre-ABS design of a redundant triangular braking system, it's so good (viz your safety) that you usually wouldn't notice that one fluid circuit has lost fluid.
[The '92-93 cars' ABS doesn't have this wonderful triangular design, so a fluid loss can be more catastrophic, and that has a fluid level sensor in the M/C's reservoir.]

Have you looked at the master cylinder's reservoir? It might be dirty, so look carefully (even remove the cap and screen, and look down into it).

Okay, if that's okay, and you're absolutely sure there's no leak or other problem in the brake system (remembering that you should take such warnings seriously), it might be the sensor.

The sensor is really a switch located in the "octopus", a confluence of brake lines into a cylinder bolted to the underside of the driver's side front fender (you have to look from underneath). This is really a pressure comparator. The switch is inserted into the center of the cylinder. The cylinder contains a sliding piston, with brake fluid lines going into both sides -- each end is pressurized by each of the two circuits. If the pressures in the two circuits are equal, the piston stays in the middle, and it keeps the wire in the switch from grounding (and lighting the warning light). But if there's a difference in pressure (e.g., due to fluid loss, air bubbles, etc.), the piston will slide away from the higher pressure side and toward the low pressure side, whichever it is, and the switch's contacts will be grounded, setting off the light. And it's usually latched -- it will stay on until the piston is centered again, after repairs are made for the leak, air in the lines, or whatever.

Check the wire to see that it hasn't come off the switch and is grounded against something nearby.

Also, if there is some corrosion in the switch, it usually makes the warning light begin to glow faintly, and then only after some time (month or more) it becomes gradually brighter -- not suddenly brighter like your case. But if the switch is defective, it can be replaced without taking apart all those brake lines. The replacement kit is p/n 272702-2 ($36.23). It's easy to replace, but I suggest a small mirror and curved forceps (tweezers) because you have to work on it from underneath.

Good luck.